Lancaster House Prices up 20.4% in the last 5 Years

Over the last 5 years, we have seen some interesting subtle
changes to the Lancaster property market as buying patterns of landlords have
changed ever so slightly.

The background to this story was the recently published set
of buy-to-let (BTL) lending statistics. Roll the clock back 12 months and 6,700
BTL mortgages were granted (in the same month) for £900m, meaning the average
BTL mortgage was £134,200. Looking at last month’s figures, and as one might
expect with the Brexit issue overhanging the property market, the lending
figures were down, yet not by the amount I originally thought. Last month, just
over 6,100 new buy-to-let mortgages were granted for a total sum of £800m
(meaning the average landlord mortgage was a respectable £131,100). Yet, when I
looked back to the boom year of the 2014 property market, in the corresponding
same month, only £1,030 million was borrowed on 8,300 buy-to-let properties
(meaning the average buy-to-let mortgage was £124,100). It seems Brexit is
having no effect on landlords buying habits.

Looking closer to home in Lancaster, throughout 2018, I have
been regularly chatting to more and more landlords, be they seasoned
professional Lancaster BTL landlords or FTL’s (first time landlords) and their
attitude is mostly positive. Instead of reading the scare-papers (oops sorry newspapers),
those Lancaster landlords that look with their eyes, will see the Lancaster
property market is doing reasonably well, with medium term rents and property
values rising; as quite obviously from the mortgage figures .. landlords are
still buying.

The question I get asked all the time is .. “What type of buy-to-let
property should I buy? You can make
money from property through both the rent (expressed as a yield when compared
to the value of the property) and how the actual value of the home itself
changes.

Since 2014, property values in Lancaster have risen by 20.4%.

We have records of what each type of property (i.e. Detached/Semi/Terraced/Apartments) has achieved per square metre going back 20 years … and looking back over the last 5 years, these are the numbers ..

They all look to have similar percentage uplifts, however as you can see from the table there is in fact some variation throughout and although only slight this can equate to thousands of pounds in monetary terms.

This has proved that semis and terraced houses have
performed the best .. although like the £/Sq.M figures, these are just
averages. When investing, whilst Lancaster apartments haven’t been the best
performers in terms of capital growth, they do tend to generate a slightly better
yield than houses, probably because several sharers can afford to pay more than
a single family. But houses tend to appreciate in value more rapidly and may
well be easier to sell, simply because there are fewer being built.

Now these are of course averages, but it gives you a good
place to start from. The bigger picture here though is this – irrespective of
what is happening in the world, be it Brexit/no Brexit, China, Trump, whatever,
Lancaster people still need a roof over their heads and we as a Country haven’t
built enough homes to keep up with the demand since the late 1980’s. This means
even if we have a short term wobble in 2019 when it comes to property values
..in the medium term, demand will always outstrip supply and prices and rents
will increase – because, I doubt the local authority, let alone Westminster,
have the billions of pounds required to build the one hundred thousand Council
houses per year nationally for the next decade to fix this issue – meaning as
the population increases, the only people who can fulfil the demand for
accommodation in the medium term is the private BTL landlord.

Before I go …on average, housing associations and local
authorities have built around 26,500 houses each year since 2010. The Labour
government had a lower average, building about 19,000 homes per year, yet in
the 1960’s, under both administrations, 180,000 councils were built per year!